E-Contract

Introduction

Today’s world is moving quickly forward in terms of communication, software, and technology, with each step aiming to improve people’s lives. Every day, we improve communication by finding new, creative solutions to overcome limitations imposed by space, time, and geography. Contracts are one such method of exchanging information and conducting business.

Our lives have always included contracts. Without our knowledge, we are constantly entering into contracts, from purchasing goods to offering services. A contract might be as simple as making an internet purchase or as complex as signing a global peace accord.

The idea of a contract has evolved into an e-contract in modern times as technology has grown. The offer, invitation to offer, counteroffer, and acceptance are all done electronically in an e-contract, and this type of communication results in an agreement.

A contract is “An agreement between two or more parties for buying/selling of goods or services for lawful compensation,” according to the Contract Act of 1872. One should be familiar with traditional contracts before talking more about e-contracts.

Despite not directly mentioning them, the Contract Act does not outright forbid electronic contracts. The software-based E-Contract system is essentially a more organised and focused version of the conventional contracting system.

When a prospective acceptor of an offer or service is presented with particular conditions, counteroffers or acceptance occur, which is followed by consideration. Here, the convergence of ideas becomes paramount.

A contract is intended to outline all terms and obligations as well as spell out the conditions for free consent and compliance. Therefore, in accordance with the Indian Contract Act, an e-contract can only be put into effect when it satisfies all of the aforementioned requirements.

Legal provisions of e-contract

E contracts have legislative power under Section 10 of the IT Act, 2008. According to this clause, a contract “shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for such purpose” when proposals, acceptances, and revocations of proposals and acceptances, as applicable, are expressed in electronic form or by means of an electronic record.

Any contract must have the signatures of both parties in order to be legally binding.

The Information Technology Act’s section 2(p) defines an electronic signature as the authentication of any electronic record by a subscriber using the electronic method listed in the second schedule, which includes a digital signature.

According to section 5 of the Information Technology Act, a requirement to authenticate information or any other thing by attaching a signature or having a document signed by or bearing the signature of a person is deemed satisfied when it is done so.

The function of an electronic signature is the same as that of a handwritten one. The Indian Evidence Act’s Section 85c stipulates that, in the case of a digital signature, the courts presume that the data contained in that certificate is accurate.

E-contracts are agreements that are entirely electronic. These agreements are often designed to be quickly and easily entered into. They work best when they are made between parties who must enter into an agreement but who reside in separate parts of the world.

Even though the two parties to the contract are sitting far apart from one another, all that is required for them to become a party to a contract is a digital signature. It is the most practical way to enter into a contract in this expanding globe. The Originator and the Addressee are the two main parties to an electronic contract.

The IT Act of 2008 defines an originator as someone who sends, generates, stores, or transmits any electronic message to be sent, generated, stored, or transmitted to anybody else, excluding an intermediary.

According to the IT Act of 2008, an Addressee is a person who is not an intermediary and who the originator intended to receive the electronic document.

Maharashtra Stamp Act

According to Section 3 of the Maharashtra Stamp Act, stamp duty is due on each document listed in Schedule I of the Act. The implication is that if a document is classified in Schedule I, stamp duty is still due even on contracts entered into electronically.

In the aforementioned Act, “execution” is used interchangeably with “signed” and “signature.” The word “signed” and “signature” are defined in this section’s explanation to include attribution to electronic records in accordance with Section 11 of the Information Technology Act.

“Mark” is the phrase used when referring to a person who is unable to write his name. Thus, an instrument may be executed in electronic form and be legally binding.

The Maharashtra E-Registration and E-Filing Rules, 2013, also make it easier to pay registration and stamp duty costs online. The Rules also make it essential to include an electronic signature or biometric thumbprint, further establishing the legitimacy of e-contracts[1].

Further stamping requirements

The receipt, which is given by the online vendor to the customer at the conclusion of a transaction, is one of the crucial records attesting to an online transaction. According to the Indian Stamp Act of 1899, a receipt is any letter, memo, or writing that acknowledges the receipt of money, a bill of exchange, a check, or a promissory note.

Contrary to the Maharashtra Stamp Act, which does not need stamping of receipts, the Indian Stamp Act of 1899 requires stamping of receipts for any money or other property valued at more than INR 5000 (Rupees Five Thousand).

The receipt, which serves as proof of the entire transaction, must be stamped even though the entire transaction is completed online without any paperwork being signed by either the vendor or the buyer.

Enforceable contracts online

1. An online contract can be enforceable if its terms can be proven and it is not for an illegal purpose.
2.  The law relating to paper contracts substantially applies to online contracts.
3.  In order to enforce an online contract, one must first prove the existence of the contract.
4.  In the absence of a formal written contract, there can be a dispute as to the existence of an agreement or the exact terms of agreement. So, the terms of the contract must be specific and clear.
5. An agreement should state each party’s obligations, what payments must be made and when, and the precise details of the work that will be done or goods to be sold and when.
6. Copy of the contract may be stored electronically or in paper form.

Case law

Trimex International Fze Limited v. Vedanta Aluminium Limited [2010 (1) Scale 574]

This is a major decision by the Supreme Court, which determined that the online arbitration agreement is the most relevant arbitration document. Because the parties do not meet in person, but rather online, it is important to clarify all details of the dispute resolution method in the agreement. Furthermore, the court found that when entering into an agreement, a meeting of minds is critical, and the agreement must comply with Section 7 of the Arbitration and Conciliation Act, 1996[2].

Conclusion

Technology makes it so simple to access anything anywhere in the globe; the internet is now a useful tool in any field. We must have a method through which we can make the procedure simple, hassle-free, and incredibly quick given the variety of transactions that are continually taking place around the world every second. E-contracts can help in this situation because they offer all of that and more.

The most fundamental idea of an electronic contract, as we have seen from the paper above, is the exchange of any sort of business or service that is deployed through a particular electronic medium and is all created, drafted, communicated, and executed through the same medium.

The execution of a contract makes all the difference, even when the drafting, method, and design are identical to those of a traditional paper-based contract. Similar to other contracts, a service, good, or business is presented along with terms, conditions, and payments (monetary or not) as necessary, accepted or counter-offered, taken into account, and then digitally signed when freely agreed upon to bring it to execution.

The reason they are so well suited for the modern day is their ability to facilitate business with composite and complicated procedures with ease and the least amount of input, whether it be a simple e-mail or a massive e-commerce company. E-contracts are currently on par with traditional methods, but we can confidently say they will dominate contracts in the future.

Bibliography

1. https://www.indianbarassociation.org/e-contracts/
2. https://ironcladapp.com/journal/contracts/what-is-an-electronic-contract/
3. legalserviceindia.com/articles/ecta.htm
4. https://www.mondaq.com/india/contracts-and-commercial-law/1104590/e-contracts-in-india
5. Law Relating to E-Contract by R.K. Singh.
6. Bakshi P.M & Suri R.K, Cyber and E-commerce Laws, Bharat Publishing House, edition 1, 2002
7. https://msbrijuniversity.ac.in

References:

[1] The Maharashtra E-Registration and E-Filing Rules, 2013

[2] https://lexpeeps.in/trimex-international-fze-limited-v-vedanta-aluminium-limited/

This article has been authored by Aditya Suryavanshi a student from Kishinchand Chellaram Law College, Mumbai.